International remittances have been increasingly regarded as an important driver
of development in many developing countries because they help households to
finance human capital investment. Our findings are broadly consistent with this
possibility.
However, unlike most existing studies, we have also highlighted the negative
guardian effects on school attendance and education expenditure share, particularly
for those school-age individuals who are neither a child nor a grandchild of
the household head. We find that the negative guardian effects are statistically and
economically significant. However, we find no evidence that international remittances
are used in an unintended way. Furthermore, as our calculations in Section
VI demonstrate, international remittances tend to compensate for negative guardian
effects for other relatives because they bring about a positive effect on
schooling through a higher income. Therefore, on balance, our study provides an
additional piece of evidence that international remittances are playing an important
role in human capital formation in the Philippines. This study also indicates
that the positive impact of remittances is likely to be overstated unless the
negative guardian effects are appropriately accounted for.
References